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TMI Blog2016 (12) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... in confirming the disallowance of Rs. 2,25,484/- out of total advance site expenses claimed of Rs. 45,09,670/-. It is submitted that for the purpose of meeting of employees' lodging& boarding expenses at site, the assessee company had provided advance from time to time. The statement showing the complete details of expenses claimed had been filed before the Ld.CIT(A). Further it is submitted that disallowance made by Ld.A.O. and partly confirmed by CIT(A) is without any basis, evidences or specific findings. Therefore the same be not accepted and total advance site expenses claimed of Rs. 45,09,670/- be allowed now and the addition sustained of Rs. 2,25,484/- be deleted. 2. The Learned Commissioner of Income-tax(Appeals) has erred in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred for the construction of factory building be restricted to the tune of Rs. 2,15,500/- and the remaining addition of Rs. 12,84,500/- be deleted now. 4. The order passed by the learned Commissioner of Incometax( Appeals) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 3. As per Ground No.1, the assessee has assailed the disallowance of Rs. 2,25,484/- out of total advance site expenses claimed at Rs. 45,09,670/-. The Ld.AR for the assessee submitted that for the purpose of meeting the employees lodging and boarding expenses at site, the assessee-company had provided advances from time to time. The statement showing details of expenses have also been filed bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tary evidences to support the expenditure claimed on the ground that such bills/vouchers are purportedly voluminous. In the circumstances, in the absence of complete details, we do not find any plausible reason to discredit the findings of the CIT(A) in this regard. Accordingly, ground No.1 raised by the assessee is dismissed. 6. The second ground relates to disallowance of Rs. 1,11,183/- out of interest expenditure. The Ld.AR for the assessee submitted that term loan of Rs. 78 lakhs bearing interest @ 14% p.a. had been disbursed by the bank in financial year 2007-08 which was utilized in the same year. It was thus contended that advances given for purchase of land during the year under consideration were out of internal accruals received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be applied @ 3%p.a. instead of 14% p.a. as per AO. The AO is accordingly directed to grant appropriate relief by computing the revised disallowance applying the rate at which the unsecured loans has been borrowed by the assessee. The AO may seek required details in this regard if he so considers it expedient. The ground No.2 is thus treated as partly allowed. 8. Ground No.3 concerns disallowance of Rs. 15 lakhs out of interest expenditure attributable to construction of the new building. The ld.AR for the assessee submitted that the assessee in the course of assessment proceedings suo motu offered Rs. 2,15,500/- towards disallowance out of interest expenditure attributable towards construction of new building. The adhoc disallowance of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs after taking cognizance of the fact that payment has been made for construction of the property in truncated manner. While we agree with the action of the AO that proviso to sub-section (iii) of section 36(1) of the Act is attracted in the circumstances as spelt, the AO ought to have appreciated the overall fund position instead of differential fund position. In view of the fact that unsecured loans of Rs. 6.65 crores bearing interest 3% p.a. is available with the assessee as claimed the benefit of low rate of interest as claimed by the assessee for the purpose of capitalization of interest costs in terms of section 36(1)(iii) of the Act cannot be denied. We therefore find force in the argument of the assessee. The AO is accordingly dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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